Nokia down on risks of possible Motorola unit bid

LONDON (Reuters) - Shares in cellphone maker Nokia Oyj NOK1V.HE edged lower on Wednesday as analysts questioned the wisdom of its possible purchase of Motorola Inc's MOT.N network equipment unit to boost its weak North American position.

The Wall Street Journal had reported Nokia Siemens Networks NOKI.UL, a joint venture between Nokia and German engineering conglomerate Siemens AG SIEGn.DE, was in talks to buy the Motorola unit for between $1.1 and $1.3 billion.

NSN and Motorola both declined comment on the report, which said an agreement could be reached in the next few weeks between the two telecom gear makers battling cut-throat competition from China's Huawei HWT.UL and others.

Nokia shares fell 0.2 percent by 1103 GMT, one of the weakest performers in a European technology index .SX8P that was up 1 percent thanks to strong results overnight from leading chipmaker Intel INTC.O.

Siemens shares were up 0.2 percent.

Richard Windsor, global technology specialist at Nomura, said he was not convinced NSN needed to buy the unit.

“The risk is they use it to break into the United States and start investing like crazy,” he said. “If they do do this transaction, it will be all about how much they should pay. The business has declining revenues but is profitable, so how much is that worth?”

Motorola, which has been losing market share in cellphones for years, is splitting into two units: one comprising phones and set-top boxes, and the other its enterprise and network equipment business.

NSN was in the running last year to buy a larger chunk of Motorola, before the U.S. group decided on the split, sources close to the situation told Reuters at the time.

NSN last year tried to buy two separate units of bankrupt Canadian telecoms equipment maker Nortel Networks Corp NRTLQ.PK but was trumped on both occasions, once by mobile networks market leader LM Ericsson ERICb.ST and once by Ciena Corp CIEN.O.

Windsor said he saw less logic in an acquisition of Motorola’s network assets, which are mainly based on the GSM standard, than of the Nortel CDMA and LTE-standard assets that NSN tried to buy.

GSM is the world’s most widespread wireless standard but CDMA is prevalent in North America and parts of Asia.

“The Nortel assets were largely CDMA-based; these will be largely GSM-based. From that point of view, the defensive position is much much less because if we look at where Huawei has been gaining share it’s in GSM,” he said.

Ericsson is the world’s largest maker of mobile network gear, owning about one-third of the shrinking market. Huawei and NSN are battling for second place.

Additional reporting by Helen Chernikoff; Editing by Phil Berlowitz and David Holmes